The AI-led rally on Wall Street extended into Asia, with semiconductor stocks driving another leg higher in global equities. Risk-on sentiment remains intact, which could keep stocks in recovery mode and provide a supportive backdrop for digital assets. With the beginning of July, we could see increased volatility as investors await speeches from several major central bank officials, including Fed Chair Warsh. Stocks continue to hold up well, with bulls remaining in control, which is supportive for the crypto market. However, some cryptocurrencies could still see slightly lower levels as the fifth wave in the Crypto market unfolds before a higher-degree recovery begins. Whatever happens, keep in mind that the NFP report is due tomorrow, and it could shake up the markets once again.
However, the crypto market still appears to be searching for one final leg lower, meaning short-term pullbacks in equities cannot be ruled out. Once cryptocurrencies complete this final corrective move, stocks could continue extending their gains, while crypto may begin a higher-degree recovery.
From a technical perspective, the Crypto TOTAL Market Cap chart could still be trading in the final stages of Wave 5, but traders should remain cautious, as additional weakness could extend toward the 1.9T area within the subwave (5) of 5 before a potential reversal and higher-degree recovery.
The current weakness across the crypto market may continue to be driven primarily by Bitcoin and its declining dominance, while several altcoins are beginning to display early signs of bottoming. Bitcoin Dominance (BTC.D) continues to favor additional downside within Wave 5, suggesting that Bitcoin could underperform parts of the broader cryptocurrency market in the near term.
Meanwhile, many leading altcoins are approaching the final stages of their corrective structures. Litecoin, for example, may already be carving out a bottom, although some altcoins could still require one more leg lower before completing their corrections. Altcoin Dominance (OTHERS.D) may have already completed its projected abc correction within higher-degree Wave iv, opening the door for a rally into Wave v.
This growing divergence between Bitcoin and altcoins suggests that capital could gradually rotate into ALTcoins. As always, the crypto market remains highly selective, with individual coins often following different technical structures and market cycles, creating opportunities even while the broader market remains in a corrective phase.
However, a more meaningful altcoin rally is likely to emerge when Bitcoin finds support and begins a larger, higher-degree recovery.
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